Opportunities and Challenges in the Newly Legalized U.S. Sports Betting Market

Last week, the U.S. Supreme Court paved the way for states to legalize sports betting. This ruling could create a multibillion-dollar market for businesses and states — provided they can manage two key elements.

Six states — New Jersey, Connecticut, Mississippi, New York, Pennsylvania, and West Virginia — already have sports betting laws in place. They’re expected to tap into the new source of tax revenue quickly. Other states, established U.S. casinos and fantasy sports websites, and European operators are sure to follow.

The profit potential has already made a few early winners. Reuters reported gaming stocks rallied around the news. Those specializing in gaming technology gained 10 percent or more.

As the market fills with operators, player experience will become a competitive differentiator quickly. And as new players are welcomed, bad actors will attempt to take advantage. To succeed, online gaming operators will need to create an exceptional player experience while preventing fraud.

How player experience and fraud detection go hand in hand

As online sports betting has grown in popularity throughout the world, players have come to expect the same seamless user experience in-play that they enjoy elsewhere online.

For example, users expect to be able to access their favorite online games on any device. In our 2018 Gambling Report, we found that the number of gambling transactions we processed from mobile devices in 2017 had grown to 62%, up from 6% in 2012. That’s an annual growth rate of 116%. What’s more, many users are accessing their favorite online gaming sites from more than one device, making it imperative to provide omnichannel authentication that doesn’t interfere with their play.

Mobile market share isn’t the only factor on the rise. From 2013 until 2017, reports of cheating fraud from online gaming operators who use our technology increased by more than a factor of 10. Along with more generalized fraud such as account takeover and credit card fraud, this includes fraud unique to the online gaming industry: chip dumping, player collusion, all-in abuse, and bonus abuse.

Left unchecked, online fraud can quickly deflate the bottom line of the most enthusiastic entrant into the new markets. Cheaters, and complaints about them on social media, can cause long-term damage to an operator’s reputation.

If those two challenges weren’t enough, U.S. sports betting operators will have to meet the challenge of self-exclusion. It isn’t yet mandatory to help players addicted to gambling to exclude themselves in the U.S., but offering this service demonstrates social accountability and an ability to self-regulate. Operators entering each state’s new market would do well to integrate strong self-exclusion measures from the beginning.

Make the most of the new market with device recognition

To shut out fraudsters and cheaters, online gambling operators around the world have come to rely on FraudForce and SureScore. The former details the user’s device by considering context, behavior, and reputation. It stops fraud in real time with help from a global network with over 50M confirmed fraud cases. The latter, SureScore, applies machine learning to dozens of indicators to predict the outcome of any given online transaction, even without any prior history with the particular player involved.

Similar technology has been improving millions of players’ experiences across the Internet. ClearKey helps to welcome players with an invisible, hassle-free authentication experience by recognizing and using their device as a second factor of authentication. ClearKey works alongside existing systems to reduce the number of challenges put between players and their gaming experiences. LaunchKey leverages adaptable, risk-based multifactor authentication to secure players’ accounts. It strengthens security for operators while delivering authentication that players actually like to use.

All of these tools will be invaluable to operators’ pursuit of VIPs. These high-value customers will receive plenty of incentives to move their play from operator to operator. Identifying and retaining them quickly and confidently will have an outsized impact.

I’m just scratching the surface with this post. iovation has a long, proud history serving online gambling operators and platforms. Watch our webinar on our 2018 iovation Gambling Report for more insights on the industry’s opportunities with fraud prevention and user authentication.